Scandem to serve as Fingrid’s portfolio manager for loss energy

Fingrid Oyj and Scandem have signed an agreement on portfolio management for Fingrid’s loss energy. The objective is to hedge against electricity price fluctuations as well as possible, thus safeguarding the stable price of the grid tariff.

Fingrid’s objective is to hedge itself against changes in the market prices of electricity and hence secure an even and predictable grid tariff. The portfolio management service provided by Scandem also covers trading in the emission rights of Fingrid’s reserve power plants, portfolio management reporting, and hedge accounting. Fingrid continues to make the purchases of physical electricity itself by buying electricity in the electricity exchange. The agreement will be valid until 30 April 2014.

The losses in the Finnish electricity transmission grid total just over 1 terawatt hours per year, which accounts for about 1 per cent of all electricity consumption in Finland. Loss energy purchases are hedged in full in advance by spreading the hedging over several years.

Energiakolmio was Fingrid’s loss energy portfolio manager as Alpiq Eurotrade’s tied agent until 31 July 2012. The agreement ended in the middle of the agreement period as Alpiq Eurotrade finished its operations in Finland. Scandem was selected as the new portfolio manager applying the previous international competitive bidding.

“The loss energy costs in Fingrid’s grid total over 50 million euros per year. It is very important for Fingrid to be prepared for changes in electricity prices. The hedging measures are carried out with a long time span, and Scandem schedules these measures as the portfolio manager independently in accordance with the given strategy and risk policy,” says Fingrid’s Senior Vice President Reima Päivinen.

“Fingrid is a significant customer of portfolio management service in the electricity market, and the company subjects the procurement of the service to comprehensive competitive bidding. We are very pleased with the confidence that Fingrid has shown towards Scandem’s expertise. For several years now, Scandem has been one of the foremost providers of services for independent electricity procurement in the other Nordic countries, and we expanded our business to also cover Finland some two years ago. We wanted to offer new alternatives to the Finnish electricity market. The growth has been rapid, as indicated by this agreement, too,” says Scandem’s CEO Juha-Pekka Lappalainen.